You’ve found yourself checking home listings, daydreaming about neighborhoods, maybe even picturing your future furniture layout—and then it hits you:
“What exactly do lenders look at when I apply for a mortgage?”
It’s a common question, especially for first-time buyers or those who haven’t been through the process in a while. While every borrower’s situation is unique, there are a few consistent factors lenders typically review when evaluating a home loan application.
At Supreme Lending, our goal is to make this part of the process more understandable, so you can feel more confident about your next steps.
1. Credit Score: One Piece of the Financial Picture
Your credit score gives lenders a general idea of how you’ve handled credit obligations in the past. It’s one of several tools used to assess eligibility and determine what loan programs might be a good fit.
For reference:
- Many conventional loan programs look for scores in the mid-620s or higher
- Some government-backed loans, like FHA, may allow lower scores depending on the full profile
Credit scores are just one part of the equation, and having room for improvement doesn’t necessarily mean homeownership is out of reach.
2. Income: The Story Behind the Numbers
Lenders want to understand your income in terms of both consistency and structure. It’s not only about how much you earn, but whether that income is stable over time and documented appropriately.
Common forms of income verification include:
- Recent pay stubs and W-2s
- Tax returns (especially for self-employed borrowers)
- Additional income documentation if applicable (bonuses, overtime, etc.)
Understanding how income is viewed from a lending perspective can help set realistic expectations from the start.
3. Debt-to-Income Ratio (DTI): Balancing Income and Obligations
DTI compares your monthly debt payments to your gross monthly income. This helps lenders evaluate your ability to take on a mortgage payment in relation to your current obligations.
Many loan programs prefer to see DTI at or below certain thresholds—often around 43%—though some allow for higher ratios with strong compensating factors.
Having some debt (student loans, auto payments, credit cards) isn’t unusual. What matters is how that debt fits into your overall financial picture.
4. Employment History: Predictability Helps
Lenders typically look for a consistent two-year employment history in the same field. That doesn’t mean job changes or short gaps are deal-breakers—they just may require additional context or documentation.
If you’ve recently changed roles or increased your income, it’s helpful to be prepared with an offer letter, pay increase documentation, or updated income verification.
5. Assets: Funds for Closing and Reserves
Your assets refer to the funds available for your down payment, closing costs, and potentially reserves (money left over after the transaction). These could include:
- Checking and savings accounts
- Retirement or investment accounts
- Gift funds, where allowed by program guidelines
Having a clear understanding of your available assets helps determine what loan options may work best.
It’s Not About Being Perfect—It’s About Being Prepared
Getting approved for a mortgage doesn’t require a flawless credit score or zero debt. What matters most is your overall financial profile and how the different pieces work together.
If you’re planning to buy a home—or just want to understand where you stand—a conversation with a licensed Supreme Lending loan officer is a great place to start. We’ll walk you through the process, help you understand what documents are needed, and explore loan programs that align with your goals.
Ready to explore what’s possible?